Intelligence chiefs told Congress today reports of the U.S. monitoring European phone traffic are false. The officials insisted that most of the data in question was collected by allied intelligence agencies and then shared with the U.S. They also weighed in on reports that the U.S. has been spying on dozens of world leaders. Instead of denying that claim, they argued that spying on leaders is a key tool and that everybody does it. NPR's Larry Abramson reports.

LARRY ABRAMSON, BYLINE: The hearing by the House Intelligence Committee came as European allies have been expressing outrage at U.S. spying on foreign leaders. And that comes on top of reports that the NSA has monitored the phone traffic of millions of European citizens. Today, the NSA decided to fight back. NSA director Keith Alexander said, in fact, media reports had misunderstood documents obtained from leaker Edward Snowden that detailed the collection of phone traffic.

GENERAL KEITH ALEXANDER: The sources of the metadata include data legally collected by NSA under its various authorities, as well as data provided to NSA by foreign partners.

ABRAMSON: In other words, foreign spy agencies eavesdropped sometimes on their own citizens and then shared that information with the NSA. European governments have been particularly upset that the U.S. has eavesdropped on their leaders, including German Chancellor Angela Merkel. Asked about that, Director of National Intelligence James Clapper sighed and said everyone does that.

JAMES CLAPPER: It's one of the first things I learned in intel school in 1963, that this is a fundamental given in the intelligence business is leadership intentions, no matter what level you're talking about. That can be military leaders as well.

ABRAMSON: Clapper and Alexander got lots of help from intelligence committee chair Mike Rogers, a loyal defender of the agencies. Rogers prodded Clapper on whether it's unusual for allies to spy on one another.

REPRESENTATIVE MIKE ROGERS: Do you believe that the allies have conducted or, at any time, any type of espionage activity against the United States of America, our intelligence services, our leaders or otherwise?

CLAPPER: Absolutely.

ABRAMSON: Clapper said the outrage from his overseas counterparts reminds him of the police chief in "Casablanca" who is shocked to find there is gambling going on in Rick's Cafe. Beyond the overseas spying question, Congress is zeroing in on possible reforms meant to limit the gathering of data about Americans such as the bulk collection of phone records. In general, intelligence chief James Clapper said putting brakes on this program would be just as damaging as the automatic budget cuts he already faces.

CLAPPER: Whether we amend a tool or remove it entirely, it actually has the same impact as a reduction in capability occasioned by sequestration.

ABRAMSON: Clapper and Alexander did indicate they would be open to minor changes. For example, holding data for three years instead of five. But they rejected more aggressive measures such as that proposed today by leaders of the House and Senate judiciary committees. The USA Freedom Act would require that searches target individuals and would prevent the NSA from sweeping up the haystack in search of a needle. James Clapper said the bulk collection program, known as section 215, would have no use if intelligence officials faced such a high standard for searches.

CLAPPER: 215 is used for now essentially investigatory leads that could lead to probable cause. So by raising that standard, it would essentially, in my opinion, neuter 215.

ABRAMSON: Intelligence leaders have been much more receptive to proposals that would increase oversight of these programs and require more transparency. They have strong support not only from the Republican-controlled House but also among Democrats in the Senate. But regular revelations guarantee that leaders of the intelligence community can expect many more visits to Capitol Hill. Larry Abramson, NPR News. Transcript provided by NPR, Copyright NPR.